How to Become a Cost Accountant
If setting up budgets and managing costs of operations for a company to maximize their profitability is what interests you then you will want to find out all about becoming a Cost Accountant. Learn about the education, job duties and opportunities here.
What Does a Cost Accountant Do?
A Cost Accountant will use processes to determine the costs of products and processes to report in financial statements and to advise management in the best course of action for an organization to maximize its costs and capabilities. For example, a bank will use cost accounting to determine the cost of processing a customer’s deposit, which in turn may provide management with guidance on how to price these services. Cost accounting started out in the manufacturing sector but today includes the service industry as well.
Cost Accountants prepare financial reports for a variety of audiences, such as tax authorities and regulatory agencies. They typically work with corporate executives to strategically plan for a company. Some expected duties and responsibilities include:
- Construct systems and controls to review data accumulation and reporting systems
- Coordinate and investigate cycle counting variances and resolve issues
- Accumulate and apply overhead costs as required
- Analyze and report on breakeven points and margins
- Report on periodic variances and their causes
- Analyze capital budgeting requests
Cost Accountant Skills
More and more emphasis is being placed on soft skills like communication and leadership in the accounting field. It is quickly becoming the distinguishing characteristic for many organizations when hiring Cost Accountants. Handling sensitive information in a confidential and responsible way and the ability to relate complex ideas in a simple, non- way would understandably make a candidate more attractive to any potential employer. A Cost Accountant generally works in an office environment, but he/ she is expected to know all production processes, and to regularly visit all departments in an organization.
Other key Cost Accountant skills include:
- Presentation Skills – present strategic decisions, summarizing key issues and alternative solutions, report on performance management and projections for the future of the business
- Communication skills – both oral and written
- Management Skills – to work as part of a cross-functional team representing all functional departments of a business
How Do You Become a Cost Accountant?
Education and Training
To become a Cost Accountant, a Bachelor’s degree in Accounting is standard for an entry-level position and a master’s degree or a Master of Business Administration (MBA) with a focus in accounting is required for advanced positions. A Bachelor’s degree usually takes four years to complete. These degrees place a strong emphasis on developing a deep understanding of theoretical and conceptual knowledge related to financial principles such as business organization, financial analysis, principles of economics, money and banking, business law, and information technology.
Many Cost Accountants choose to voluntarily become Certified Management Accountants (CMA) as they realize the advantage that this would give them. This is a globally recognized qualification which The Institute of Certified Cost & Management Accountants provides qualified applicants who pass an exam on cost accounting with the Certified Cost Accountant or CCA designation, and this is highly valued by potential employers. Career opportunities are definitely enhanced with this certification. A relevant formal education together with excellent analysis skills, the ability to collaborate with a multi-department team and experience in manipulating large databases will make you more than eligible for the position.
Cost Accountants often move to higher-level positions within the management accounting world, such as an Accounting Manager, Budget Director, Chief Cost Accountant or an Internal Auditing Manager. Since most Cost Accountant s work directly with senior and executive management, it is an opportunity to gain experience and a professional network that one can leverage later to enhance in this field. Eventually one could become a Chief Financial Officer, Treasurers or Presidents of corporations.
Finding a job
Statistics from the U.S. Bureau of Labor Statistics show that all Accountants and Auditors can look forward to a faster-than-average growth in job openings between 2014-2024, with those holding a professional designation, such as CMA or Certified Public Accountant (CPA), enjoying the best prospects. The forecast predicts an 11 percent growth for all Accountants and Auditors in that period, which amounts to 142,400 job openings. This growth is largely driven by the globalization of businesses which relate to international trade, mergers and acquisitions. After recent corporate financial difficulties, businesses face stricter regulations. As tighter measures are put in place, accounting services will be expected to increase in order to help businesses comply with new laws and regulations. This makes a career in cost accounting a highly attractive specialized field for financial professionals.
Any successful Cost Accounting job search begins with designing a high-quality resume that highlights your relevant skills and experience. For guidance on creating a resume, take a look at our library of Cost Accountant resume samples.
Once you have a resume complete, you will need to start your online search for Cost Accountant job opportunities. As you look for openings, be sure to leverage your professional network, including people you may have met along the way.
A cover letter that expresses your interest in the position and highlights your qualifications and what you will bring to the role is vital when applying for Cost Accountant jobs. If you need some help with cover letter inspiration check out our collection of cover letter samples.
Insights from a Cost Accountant
To get an inside look at how to become a Cost Accountant, we spoke to Kathy Downs, who is Vice President of Robert Half Finance & Accounting. You can read more about her profile on her LinkedIn bio or find out more information about accounting from her blog site. Here’s what she had to tell us.
What is the common career path for Cost Accountant?
A bachelor’s degree is typically required to become a Cost Accountant, as well as strong math skills. Many Cost Accountants need to have experience in the employer’s industry or sector. The employee might start out in the finance department as a staff accountant, and transition over time into a cost accounting role.
A Cost Accountant will likely have to work in a plant at some point and be involved with operations analyzing raw materials cost and appropriating labor costs. This will probably include multiple shifts and cost appropriation of premium labor pay to finished goods, as well as doing analysis on work in process.
What should someone consider before becoming a Cost Accountant?
Cost Accountants are often responsible for managing company inventory counts of a given product. They are also in charge of tracking the cost of goods sold and calculating overhead costs. If this doesn’t interest you, this probably isn’t the right career choice.
Cost Accountants analyze data to recommend ways to make products and processes more efficient and cost effective. Depending on the industry, they may also work with sales teams to develop estimates and bids for clients.
Are you willing to spend the majority of your time in a manufacturing plant? Often the work attire will be more casual. There may be strong smells and additional safety precautions that you wouldn’t find in a more corporate setting. In some locations, there will not be air conditioning or heating, and the work location may be in a rural area.
What type of person excels in this job?
Cost Accountants estimate the time, materials, cost and labor associated with products or services, so people who are passionate about their industry or type of product, collecting data and showing attention to detail can excel in this job.
What are some of the most important skills for Cost Accountant to have?
Soft skills: Strong research capabilities, problem solving and analytical skills are all important traits for Cost Accountants. It’s equally important to have the ability to work with all types of people, while building their trust and respect.
Hard skills: Experience with cost-estimating software is a plus for this role. Proficiency with Microsoft Excel is also preferred. Additional sought-after designations for Cost Accountants:
- Certified public accountant (CPA)
- Chartered global management accountant (CGMA)
- Certified management accountant (CMA)
- Master’s degree in business (MBA)
What do you find to be the most rewarding aspect of being a Cost Accountant?
Though I’m not a Cost Accountant, Robert Half Finance & Accounting places costs accountants at companies of all sizes on a global basis. This specialized area of accounting can be extremely rewarding in helping a company continue to operate at peak performance, excel in a different industry or market, or succeed with the launch of a new product.
Cost accounting involves a set of skills generally obtained early in your career. It gives someone the ability to always fall back into these skills during various points within their career. A controller or CFO who has never done cost accounting will have a difficult time obtaining a senior level role in manufacturing.
How Much Do Cost Accountants Get Paid?
The Bureau of Labor Statistics reported the median annual wage for Accountants and Auditors was $67,190 in May 2015. The lowest 10 percent earned less than $19.90 per hour, and the highest 10 percent earned more than $41.40 per hour. The bulleted list below will include BLS data for the top 10 states for median wage from highest to lowest.
Top 10 States for a Cost Accountant Salary
Cost Accountant s in the following states make the highest median hourly wage in the U.S.
- District of Columbia: $44.71
- New York: $44.05
- New Jersey: $41.72
- Massachusetts: $ 39.68
- Alaska” $39.93
- California: $38.88
- Virginia: $38.74
- Delaware: $37.77
- Texas: $37.73
- Colorado: $35.91
Cost Accountant Resources
If you need more information? We put together this list of additional resources to help you as you continue to explore a career as a Cost Accountant.
On the Web
Management and Accounting Web – Information for accounting education, research and practice
Federal Accounting Standards Advisory Board – for accounting resources like manuals and guidelines and reference materials
Society of Cost Management – a site to share ideas, promote best practices and connecting people.
AICPA – a member association representing that sets ethical standards, auditing standards and develops the CPA Exam
AccountingCoach.com – here you can find the world’s largest free online accounting course
CPA Trendlines – provides information for the tax, accounting and finance community
GoingConcern.com – for accounting news
Accounting Onion – for financial reporting issues
The information in this article comes from the Bureau of Labor Statistics, job postings and other online sources.